Several AI hardware companies are great buys.
While investors have been told that artificial intelligence (AI) spending will rise again in 2026, some are getting a little tired of the AI business. However, they must realize that this is a generational investment opportunity and they must remain exposed to this trend as a significant amount of money is spent on AI computing power.
While we are still waiting for a return on the investment Companies that use generative AI technology are already making a lot of money with it. These AI hardware vendors include Nvidia (NVDA +1.53%), Broadcom (AVGO 1.61%), Advanced micro devices (AMD +2.35%)And Taiwanese semiconductor manufacturing (TSM +2.29%). These four are excellent investment choices for 2026, and I think investors should definitely take advantage of them.
Image source: Getty Images.
The AI hardware race is heating up
Nvidia, Brodacom and AMD are all competing with each other. Nvidia is the leader in this space, and its graphics processing units (GPUs) have been the go-to chips since AI releases started in 2023. They’re so popular that management said in its third-quarter results that the cloud GPUs were sold out. That is an achievement that underlines the enormous demand for its products.
And that demand is unlikely to decrease anytime soon. Nvidia believes global capital expenditure on data centers will rise to $3 trillion to $4 trillion by 2030. That’s up from $600 billion in 2025 and would be a huge opportunity for the company and its competitors.
Today’s change
(1.53%)$2.83
Current price
$187.67
Key data points
Market capitalization
$4.6 tons
Day range
$186.82 -$189.60
Range of 52 weeks
$86.62 -$212.19
Volume
143M
Avg. full
187M
Gross margin
70.05%
Dividend yield
0.02%
AMD offers similar products, but the associated ecosystem is seen as a downgrade. As a result, its data center business is about one-tenth the size of Nvidia’s. However, it believes it can take advantage of some emerging opportunities.
Since Nvidia no longer has cloud GPUs, customers can turn to AMD to buy computing power. This could make them realize that AMD’s technology has become close to Nvidia’s, which could potentially boost growth. Management is counting on this and expects the data center division to achieve a compound annual growth rate (CAGR) of 60% through 2030.
If AMD can achieve that level of growth, it’s a no-brainer purchase at current levels.
Broadcom is taking a completely different approach to AI. While GPUs are great for a wide range of computing applications, some of their capabilities are lost if they are used for only one purpose. This opens up the possibility for its application-specific integrated circuits (ASICs).
When a workload is configured in a standardized way, ASICs can deliver performance superior to that of general purpose computing units such as GPUs, at a lower price. Broadcom is working directly with several AI hyperscalers to design ASICs for their AI models, and this is driving monstrous growth.
Today’s change
(-1.61%)$-5.24
Current price
$320.25
Key data points
Market capitalization
$1.5 tons
Day range
$314.14 -$321.96
Range of 52 weeks
$138.10 -$414.61
Volume
1.2 million
Avg. full
30M
Gross margin
64.71%
Dividend yield
0.76%
For the first quarter, Broadcom expects AI semiconductor revenue to double year over year. That’s just the beginning, as these chips could become even more popular than Nvidia’s GPUs in the coming years.
All three of these are great AI investments, but none of them actually produce chips.
Taiwan Semiconductor supports all three companies
Nvidia, AMD and Broadcom are fantastic designers, meaning they design the chips, but don’t make them. Several companies in the supply chain perform this work for them, including Taiwan Semiconductor (TSMC).
Taiwanese semiconductor manufacturing
Today’s change
(2.29%)$7.50
Current price
$334.87
Key data points
Market capitalization
$1.7 tons
Day range
$331.37 -$337.15
Range of 52 weeks
$134.25 -$351.33
Volume
13M
Avg. full
13M
Gross margin
59.02%
Dividend yield
0.92%
TSMC operates the world’s largest chip foundry and makes a lot of money from it. Without its capabilities, AI technology wouldn’t look the same. Management believes that the AI chip business will have a medium to high CAGR of 50% between 2024 and 2029, underscoring strong demand. That level of growth is unheard of in the chip industry and it bodes well for the stock.
I think Taiwan Semiconductor is an excellent choice among the other three, and all four should move higher throughout the year.
